Mock 6

Name: ______________________ Date: ___________________

1) The FAIS Act requires that the FSP/Key Individual must ensure that the
Representatives are fit and proper at recruitment and appointment stage and
secondly that the Representatives remain fit and proper throughout their
employment.
Consider the following statements carefully and then choose the statement that is
FALSE.

a) To ensure honesty and integrity you can check the data bureau.
b) To ensure honesty and integrity you should only rely on the applicant's disclosure
of information as the FAIS Act prohibits any checking of information submitted by
prospective Representatives.
c) To ensure honesty and integrity you can check the validity of membership of
professional bodies or other institutions.
d) To ensure honesty and integrity you can check the FSCA website to see if a
Representative has been debarred.

2) Which of the following statements are TRUE regarding record keeping

obligations in terms of the Act?

a) The FSP must ensure that records are kept for a minimum of fifteen years except
if the Commissioner allowed specific exemptions in this regard.
b) The FSP, and by implication it will be part of the management duties of a Key
Individual, must ensure that records are kept for a minimum of five years except if
the Commissioner allowed specific exemptions in this regard.
c) The FSCA, and by implication it will be part of the management duties of a Key
Individual, must ensure that records are kept for a minimum of two years.
d) The FAIS Commissioner, and by implication it will be part of the management
duties of a Key Individual, must ensure that records are kept for a minimum of
five years except if the Commissioner allowed specific exemptions in this regard.

3) Consider the following statements carefully and then choose the statement that is
FALSE.

a) FSP must ensure that a compliance function exists or is established as part of the
risk management framework of the business.
b) FSPs are not allowed to outsource the compliance function.
c) The compliance function must be supervised by an approved Compliance Officer
as required by the Act, or managed and controlled by the FSP alone (where the
FSP has less than one Key Individual or Representative).
d) The FSP/Key Individual is responsible to ensure that the appointed FAIS
Compliance Officer has adequate resources available to meet all the compliance
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requirements of the FAIS Act.

4) Once a Representative has been removed from the FSP Representative's register,
who needs to be informed in writing of this?
Choose one answer.

a) FAIS Commissioner.
b) National Credit Regulator.
c) Financial Sector Conduct Authority .
d) FAIS Ombud.

5) How often should the Representative register be updated?

a) Every month.
b) Bi-annually.
c) Within 15 days of any changes to the Representative’s fit and proper
circumstances.
d) As soon as there are any changes to the Representative’s fit and proper
circumstances.

6) Certain records need to be kept in terms of the FAIS requirement. Which one of
the statements is TRUE?

a) A copy of the insured’s payslip.

b) A copy of the insured’s bank statement.
c) A copy of the recommendation made to the client.
d) A copy of the insured’s financial arrangement account agreements.

7) Who is responsible for approving Representatives?

a) The FSCA.
b) The FAIS Commissioner.
c) The FSP.
d) The FAIS Ombud.

8) Competency requirements include the following:

a) Minimum experience requirements.

b) Once-off compliance with Continuous Professional Development requirements.
c) Honesty and integrity.
d) The successful completion of relevant Regulatory Examinations within 7 years
of appointment.

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9) What is the aim of FICA?

a) To establish the Financial Intelligence Centre.

b) To combat money laundering activities.
c) To impose certain duties on institutions who might be used for money
laundering services.
d) To combat money laundering and impose certain duties on institutions who
might be used for money laundering services.

10) In terms of the FAIS Act, records are to be kept in a certain

way. Choose the CORRECT statement.

a) In a steel cabinet that is fireproof and is easily accessible.

b) In the basement of the office building and is easily accessible.
c) In a manner which is safe from destruction.
d) In a safe at the insurer’s bank that is easily accessible.

11) Who determines if a Key Individual is Fit and

Proper? Choose the CORRECT one.

a) The FAIS Commissioner.

b) The Compliance Officer.
c) The Long Term Insurance Commissioner.
d) All of the above.

12) If a Representative does not meet one or more of the competence requirements
by the cut-off date:

a) The FSP should give him a written warning and leave him on the rep register.
b) He can continue to render financial services until he meets the requirements but
must be supervised.
c) He is not fit and proper and must be removed from the rep register.
d) He can continue to render intermediary services only.

13) In which year was the FAIS Act established?

a) 2001.
b) 2002.
c) 2003.
d) 2004.

14) Which actions define a breach in honesty and integrity within the FAIS
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Act? Choose the CORRECT description.

a) Dishonesty and Fraud.

b) Negligence and Incompetence.
c) Mismanagement of funds.
d) All of the above

15) A Compliance Officer has certain responsibilities, choose the INCORRECT

statement.

a) Needs to take responsibility for liaising with the Commissioners.

b) Submit Compliance Reports and other compliance functions to the Ombud for
FAIS.
c) Monitor compliance within the FAIS Act.
d) All of the above.

16) Choose the CORRECT statement that would describe the purpose of debarment.

a) A representative, under certain circumstances, is prevented from rendering

financial services to clients.
b) A FSP, under certain circumstances, is prevented from rendering financial services
to clients.
c) A compliance officer, under certain circumstances, is prevented from providing
compliance service to clients.
d) All the above

17) What is the difference between the suspension and the lapsing of a licence?
Choose the CORRECT statement below.

a) Suspension or withdrawal of a licence is the result of factors other than

noncompliance with the requirements of the FAIS Act. Lapsing of a licence may
be the result of a person's death.
b) Suspension or withdrawal of a licence is the result of noncompliance with the
requirements of the FAIS Act. Lapsing of a licence is the result of factors other
than non-compliance.
c) Suspension or withdrawal of a licence is the result of noncompliance with the
requirements of the FAIS Act. Lapsing of a licence is the result of a person not
meeting the competency fit and proper requirement.
d) Suspension or withdrawal of a licence is the result of one's resignation from the
services of an FSP. Lapsing of a licence is the result of factors other than non-
compliance

18) The FAIS Commissioner may withdraw the FSPs licence at any time. Choose the
CORRECT reasons below why this could be done.
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a) Did not disclose all relevant information to the Commissioner during application
for the licence.
b) Offered false or misleading information to the Commissioner when applying for a
licence Contravened or failed to comply with FAIS in a material matter.
c) All of the above.

19) When can a licence that has been withdrawn by the FAIS Commissioner be
reinstated? Choose the CORRECT statement.

a) When the FSP proves that he can meet the fit and proper requirements.
b) A withdrawn licence cannot be reinstated.
c) When the FSP proves that he has the operational ability to maintain customer’s
financial affairs.
d) a and c.

20) The Commissioner may suspend or withdraw a FAIS license, subject to certain
conditions.
Which statements are TRUE regarding suspension and withdrawal of licenses?

i. The Commissioner may suspend or withdraw any license if the Commissioner

is satisfied on the basis of available facts and information that the licensee did
not, when applying for the license, make full disclosure of all relevant
information to the Commissioner, or furnished false or misleading information.
ii. The Commissioner may suspend or withdraw any license if the Commissioner
is satisfied on the basis of available facts and information that the licensee no
longer meets the requirements of Fit and Proper.
iii. The Commissioner may suspend or withdraw any license if the Commissioner
is satisfied on the basis of available facts and information that the licensee still
owes levies, penalties or administrative sanctions to the FSCA and hasn't paid
it.
iv. The Commissioner may suspend or withdraw any license if the Commissioner
is satisfied on the basis of available facts and information that the licensee
closed business or is dead.

a) i and iii only.

b) i and ii and iii only.
c) iii and iv only.
d) i and iv only.

21) The FSP must do the following in order to debar a Representative:

i. Withdraw the authority of the Representative to act for and on behalf of the
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FSP.
ii. Remove the name of the Representative from the Representative register.
iii. Remove the name of the key individual from the Representative register.
iv. Return the FAIS license to the Commissioner.

a) i and iv only
b) i and iii only
c) i and ii only
d) ii and iv only

22) The following records need to be kept in terms of Section 18 of the FAIS Act:

i. Records of complaints received in the last financial year and information on

whether the complaints have been resolved.
ii. Records of instances of non-compliance with the Act as well as reasons for
noncompliance.
iii. Records of known premature cancellations of transactions or financial products
by clients of the FSP.
iv. Records of ongoing compliance by Representatives as required by Section 13(1)
and (2) of the Act.
v. Continued compliance with the requirements of fit and proper.

a) i and ii and iv only

b) ii and iii and iv and v only
c) i and ii and v only
d) i and ii and iii and iv

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23) There are additional steps to take by the FSP when debarring a Representative.
They include:

i. ensure that concluded business of the Representative is properly recorded by the

Commissioner.
ii. take immediate steps to ensure that the debarment does not prejudice the
interests of the clients of the Representative.
iii. ensure that unconcluded business of the Representative is properly concluded.
iv. ensure that all clients get a warning not to do business with the debarred
Representative.

a) i and iii only

b) ii and iii only
c) iii and iv only
d) ii and iv only

24) Which of the following statements pertain to the record keeping obligations in
terms of the General Code?

i. Telephonic conversations regarding the provision of financial services must be

recorded and the records kept for five years, but if no financial service is
provided within 45 days of the telephonic advertisement, the record may be
discarded.
ii. The records must be kept for five years from inception of the product.
iii. There must be provision in the systems and procedures for a FSP to access and
convert voice logged records to a written format if required.
iv. Clients must be able to get copies of the telephonic advertisement records
within ten days of request.

Choose one answer.

a) i and iii only

b) ii and iii only
c) i, ii and iii only
d) ii and iv only

25) Which of the following must be disclosed to clients as soon as possible?

i. Detail about the legal relationships between FSP, product supplier and
Representative (if any); so that it is clear to the client who accepts responsibility
for the actions of the FSP or Representative or the extent to which the client
must accept such responsibility.
ii. Names and contact details of the relevant legal departments
iii. The contact details of the Representative.
iv. Details of the financial services which the provider is authorised to provide and
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of any conditions or restrictions applicable to the license and whether the FSP
has guarantees or professional indemnity or fidelity insurance cover or not.
v. Whether a Representative of a provider is rendering services under supervision
as defined in the Determination of Fit and Proper Requirements.

Choose one answer.

a) i and iii and iv and v

b) i and ii and iii
c) iii and iv
d) i and iii

26) The General Code prescribes certain measures to keep records safe from
destruction.
Which of the following statements are FALSE?

i. The records and documentation must be kept safe from destruction.

ii. All records must be secured in area /safe which is fire proof and not subject to
other destructive forces.
iii. An FSP must keep the records themselves and ensure that it is available for
inspection within 7 days of the Commissioners request.
iv. All records must be kept in locked cupboards.

a) i and iii only

b) i and iii and iv only
c) ii and iii and iv only
d) ii and iv only

27) In terms of general competency requirements, a Representative, must at date of

appointment by an FSP:

i. be fully experienced as services under supervision only applies to key

individuals.
ii. have the minimum experience requirements (unless the Representative works
under supervision).
iii. have completed all the CPD requirements.
iv. have all the required qualifications (unless the Representative works under
supervision)

a) i and ii only
b) i and iii only
c) ii and iv only
d) i and iv only

28) Which of the following statements are FALSE?

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i. “Direct supervision” means the supervision of a Representative under the

guidance, instructions and supervision of a supervisor, which occurs on a daily
to weekly basis.
ii. “Ongoing supervision” means the way supervision is exercised after the period
of ‘direct supervision” has been completed, which occurs on at least a bi-
weekly to monthly basis.
iii. “Direct supervision” means the supervision of a Representative under the
guidance, instructions and supervision of a supervisor, which occurs on a
monthly to weekly basis.
iv. “Ongoing supervision” means the way supervision is exercised during the
period of ‘direct supervision” has been completed, which occurs on at least a
weekly to monthly basis.

a) i and iii
b) i and ii
c) ii and iii
d) iii and iv

29) What recourse does a Representative have when the Commissioner wants to
debar him/her?

i. There is no recourse, the Commissioner has absolute powers and can debar a
person without notice.
ii. The Commissioner must inform the Representative of the grounds for the
intention to debarment and must give the Representative a reasonable
opportunity to reply.
iii. The Representative must apply to the Ombud for special leave to appeal against
the debarment.
iv. The Commissioner must also inform the Representative of any terms or
conditions it wants to attach to the suspension.

a) i and iii only

b) ii and iii only
c) iii and iv only
d) ii and iv only

30) What must the Commissioner do before suspension or withdrawal of a FAIS

license?

i. The Commissioner must consult a regulatory authority (like the Commissioner

of Banks).
ii. The Commissioner may inform the FSP of the intention and provide opportunity
to respond.
iii. The Commissioner must inform the FSP of the intention to suspend or withdraw
and the grounds therefore and give the licensee reasonable opportunity to make
submissions
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iv. The Commissioner must consider responses received from the FSP and decide
accordingly.

a) i and iii only.

b) ii and iii only.
c) iii and iv only.
d) i and iv only.

31) Alan is a representative for InsureMe. Which of the following actions will be
regarded as rendering a financial service to clients?

i. Alan hands out brochures about insurance products and explains the products
factually when asked by clients.
ii. Alan often gives his own opinion about financial products to clients and
recommends certain products.
iii. Alan often guides his clients to replace products.
iv. Alan often needs to update the policy details of clients, such as the risk address
or make of vehicles.

a) i and iii and iv

b) i and ii and iii
c) i and ii and iv
d) ii and iii and iv

32) The insurance cover requirements for a FSP includes the following:

i. Category I or IV providers who do not receive or hold client's financial products

or funds on behalf of clients on 21 September 2009 MUST have in force, in
respect of the clients suitable guarantees of a minimum R1 million OR suitable
professional indemnity cover of a minimum of R1 million.
ii. Category I or IV providers who do receive or hold client's financial products or
funds on behalf of clients on 21 September 2009 MUST have in force, in
respect of the clients suitable guarantees of a minimum R1 million OR suitable
professional indemnity and fidelity insurance cover of a minimum amount of R1
million.
iii. Category II provider Who does not receive or hold clients' financial products or
funds on behalf of clients on 21 September 2009 MUST have in force, in
respect of the clients suitable guarantees of a minimum R1 million OR suitable
professional indemnity cover of a minimum of R1 million.
iv. Category II provider Who does receive or hold clients' financial products or
funds on behalf of clients on 21 September 2009 MUST have in force, in
respect of the clients suitable guarantees of a minimum R5 million OR suitable
professional indemnity and fidelity insurance cover of a minimum amount of R5
million RESPECTIVELY.

a) i and ii and iv only

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b) i and iii and iv only
c) ii and iv only
d) i and ii and iii and iv

33) The FSPs licence is granted by which governing

body? Choose the CORRECT one.

a) The South African Reserve Bank.

b) The Insurance Institute.
c) The Banking Council.
d) The Financial Sector Conduct Authority.

34) “Dirty” money is disguised in certain investments so that the illegal funds
avoid detection. How are the profits disguised?
Choose the CORRECT one.

a) Property and vehicles.

b) Life assurance investments.
c) Travellers cheques.
d) All of the above.

35) The FAIS Act prescribes that the FSP must keep records regarding the payment
of a claim for a certain period of time. What is the prescribed period?
Choose the CORRECT one.

a) For a minimum of 5 years after payment of the claim.

b) For a minimum of 5 years after payment of the claim.
c) For a maximum of 3 years if records are stored at an off-site facility.
d) For a minimum of 7 years if the deceased died an accidental death.

36) There is a time period that the FSP has to adhere to regarding the confirmation of
information provided to the client. Choose the CORRECT amount of days that
is required. How many days does an FSP have, to confirm the information
provided to the client verbally, regarding product supplied?

a) Within 45 days from date of transaction.

b) Within 30 days from date of transaction.
c) Within 12 months from date of transaction.
d) Immediately.

37) There are different product categories and subcategories in the FAIS Act.
Which of the following is NOT a subcategory?

a) Securities and Instruments; Debentures and securitised debt.

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b) Participatory Interests in one or more collective investment schemes.
c) Friendly Society Benefits.
d) Retail Insurance Benefits.

38) InsureMe, an authorised short term insurance provider appoints John as a

representative and place him on the rep register. A complaint is later lodged
against him for mis-selling.
Who will be held responsible?

a) John will be held entirely responsible.

b) InsureMe and the compliance officer will be held responsible.
c) The FSCA will be held responsible.
d) InsureMe will be held responsible.

39) Part of the FAIS Act fit and proper requirements are that a Representative must
meet the honesty and integrity requirements. TrustUs, an insurance company,
wants to appoint a couple of Representatives. Patrick and Ryan are potential
candidates.
Read each statement carefully and then choose the potential candidate.

a) Ryan worked for a large brokerage with a FSP licence four and a half years ago.
He tells you that he left them because their FSP licence was suspended because the
Key Individual committed fraud.
b) Patrick is appointed as a Representative by his current employer and he has been
rendering financial services in various subcategories of Category I products for the
past two years.
c) Ryan is a Category IIA Representative and he has two years practical experience in
rendering financial services.
d) Patrick has a qualification that is not on the FSCA qualification list.

40) TrustUs advertises a new financial service by telephone to their clients. They have
a system and procedure in place to access and convert the voice logged records to
a written format. If no financial service was provided from the telephonic
advertisement, what is the minimum period that TrustUs must retain the records
for?

a) 60 days.
b) 30 days.
c) 45 days.
d) 90 days.

41) Which actions define a breach in honesty and integrity within the FAIS
Act? Choose the CORRECT description.

a) Dishonesty and Fraud.

b) Negligence and Incompetence.
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c) Mismanagement of funds.
d) All of the above.

42) Read each statement carefully and then choose the statement that is FALSE.

a) Representatives are appointed by the FSP, either through employment or

through a mandate type agreement and act on behalf of the FSP.
b) The FSP carries the responsibility for the actions of Representatives and needs to
include the required information about the Representatives in the Representative
register.
c) The Representative register needs to be updated twice a year or when a
Representative joins or leaves the FSP's employment.
d) The FAIS Commissioner does not issue licences to Representatives and the
Commissioner does not approve Representatives either.

43) For the compliance and non-adherence to the FAIS Act and related legislation,
who within an FSP is overall responsible?

a) The Representative.
b) The Key Individual.
c) Compliance Officer.
d) The FSCA.

44) The FAIS Commissioner may, by notice in the Gazette, declare a particular
business practice undesirable. What would they consider to be undesirable
business practices?
Choose the CORRECT statement.

a) Harm to clients.
b) Prejudice to clients.
c) Deceiving of clients.
d) All of the above.

45) Choose the CORRECT statement which is a condition for re-appointment of a

FSP (Sole Proprietor) after debarment as a result of causes other than a lack of
competence?

a) 6 months must have elapsed since the debarment date.

b) Only the fit and proper requirement of competency must have been met.
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c) 12 months must have elapsed since the debarment date.
d) Only the fit and proper requirement of honesty and integrity must have been
met.

46) The FSP must inform the Commissioner in writing of the removal of a
Representative's name from its Register. What is the time period in which this
must be done? Choose the CORRECT statement.

a) Within 5 days of the removal of the Representative's name.

b) Within 30 days of the removal of the Representative's name.
c) Within 10 days of the removal of the Representative's name.
d) Within 15 days of the removal of the Representative's name.

47) If the FSP does NOT adhere to the FAIS Commissioner's ruling regarding an
undesirable business practice, a fine of not more than a certain amount may be
issued. Choose the CORRECT statement.

a) R10 000 000 or imprisonment of not more than ten (10) years, or both may be
imposed.
b) R1 000 000 or imprisonment of not more than ten (10) years, in the alternative,
may be imposed.
c) R1 000 000 or imprisonment of not more than ten (10) years, or both may be
imposed.
d) None of the above.

48) There are certain purposes for disclosure of financial products to a client. Choose
the statement that CORRECTLY describes the purposes.

a) To enable the client to make an informed decision.

b) To enable the insurer to evaluate the risk.
c) To be used as an agenda for a discussion with the client.
d) To inform the Representative of the attitude of the client towards the
recommended product.

49) Consider the following statements carefully and then choose the statement that is
FALSE.

a) A FSP must ensure that a compliance function exists or is established as part of

the risk management framework of the business.
b) FSPs are not allowed to outsource the compliance function.
c) The compliance function must be supervised by an approved Compliance Officer
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as required by the Act, or managed and controlled by the FSP alone (where the
FSP has less than one Key Individual or Representative).
d) The FSP/Key Individual is responsible to ensure that the appointed FAIS
Compliance Officer has adequate resources available to meet all the compliance
requirements of the FAIS Act.

50) Which of the following statements are TRUE with regard to the record keeping
requirements in Section 24 of the FIC Act?

i. In terms of Section 24 (1), the record keeping obligation may be outsourced to a

third party provided the accountable institution is given free and easy access to
these records.
ii. Outsourcing of the record keeping function to a third party discharges the
accountable institution from the record keeping responsibility.
iii. Section 24(3) stipulates that if the accountable institution appoints a third party
to keep records on its behalf, then particulars of the third party keeping records
on behalf of the accountable institution must be provided to the FIC.
iv. Section 24(3) stipulates that if the accountable institution appoints a third party
to keep records on its behalf, then particulars of the third party keeping records
on behalf of the accountable institution must be provided to the FSCA.

a) i and iii and iv only

b) ii and ii and iii only
c) i and iii only
d) ii and ii and iii and iv

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